Sunday, January 23, 2011

See the guy receiving the George Halas trophy in the video? I went to High School with him. Played baseball with him (well he played, I mostly sat on the bench and coached 3rd base). Worked with him too. So, congrats Murph! Now, about those tickets.......

Since reading "The Predictioneer's Game" by Bruce Bueno de Mesquita, an outstanding book about Game Theory and how you can predict outcomes by looking at movitations, I have begun to think more about how much incentives matter in everything. In fact, you could certainly blame the financial meltdown of 2008 on a system of horrible incentives.

Today, I was reading the latest Sports Illustrated "Lance Armstrong did drugs" expose, and thinking about how, taking into consideration how much incentives matter in our decision making, it is highly unlikely that Lance won all those Tours while clean. Look at it from the point of the athlete (and this goes for other sports as well). The upside of doing drugs is a whole shitload of money, fame, cars, girls, respect. No doubt Lance has gotten all of that in spades.

And the downside? Well, first you would have to get caught, which during most of the 90's and early 2000's seemed pretty unlikely. Then, you get fined or suspended. Given that deal, what would you do? Oh, I know, we all like to think we would do the moral thing and stay clean, and watch everyone else succeed while we end up selling Lady Kenmores (see "Bull Durham!). But most of us don't face these big dilemmas.

The SI article has a lot of pretty compelling evidence. Given the incentives to take drugs, it is highly unlikely anyone, in any sport, stayed clean. That some probably did should, I guess, give us some positive feeling about human nature.

Look, I rooted for Lance as much as anyone. And I would love to believe that the wonderful story he has been selling us is true. Overcome cancer to become the greatest ever in the most punishing sport on earth, then use his money and fame to cure cancer! That's an awesome story! But I have to look at the evidence, and what I know as a student of Economics and conclude that it is pretty unlikely that Lance was the only guy on a bike not on drugs, AND he kicked everyone's ass.

I wanted to add a bit of research of my own to this story, so I asked a friend who was a professional cyclist, and knows Lance (but does not like Lance at all!!) this question: If you had to guess, would you say he was using performance enhancing drugs? The response: "Absolutely he did drugs!".

So, Lance was probably on drugs. Mark McGwire was on drugs. Mickey Mantle was a drunk. Kirby Puckett was an abusive nutjob. Barry Bonds and Roger Clemens were on drugs. The Tooth Fairy and Santa Claus were really your parents. The Easter Bunny's eggs will make you fat and diabetic.

In truth, the coming deficits are a result, above all, of the fact that most Americans are scheduled to receive far more in Medicare benefits than they have paid in Medicare taxes. Conservative and liberal economists agree on this point. After Medicare on the list of big, growing budget items come Social Security and the military.

The three programs are roughly as popular as tax increases are unpopular – which is precisely why solving the deficit problem will be so difficult.

Herein lies the political problem. We want to cut spending. We just don’t want to cut the benefits that the spending pays for.

Those polled, in general, preferred reducing the deficit by cutting spending versus raising taxes, and a depressing 56% thought it would be possible to fix the problem without raising taxes, disagreeing with most who have seriously studied the problem. And given the choice of cutting Social Security, Medicare or Military spending, the military comes out as the big loser, with 56% saying to cut it first. (Looks like Socialism had already won out as the predominant ideology in America! Glenn Beck and Sarah Palin will be driven even crazier, if that is possible.) So, folks want to cut the deficit, but they don't want taxes raised, and they don't want benefits cut.

The real problem is that politicians, who generally just care about getting elected, don't want to tell anyone this. You didn't hear the GOP talk about cutting Medicare or Social Security in their recent electoral victory. Instead, they lied about cuts to Medicare in the new health care legislation. And you won't hear the Dems talk about it either. So, down the road to ruin we coast, with no steering wheel and no competent driver. Cutting earmarks and other pork-barrel spending is a great idea, but it won't balance the budget. Not even close. And the idiots in Congress don't even have the guts to bring up wasteful and stupid things like farm subsidies, let alone the big entitlements.

I'll stop ranting now, because this is all just too depressing, and I see very little hope for solving this problem before it becomes a crisis.

Tuesday, January 18, 2011

Over the weekend I had the pleasure of seeing "The King's Speech". This may be amazing news to readers of this blog who are students, but it is possible to make a fantastic film without blowing up a boat or using CGI to create monsters or a new world. And it doesn't even have to be 3D! Colin Firth and Geoffry Rush are brilliant in this witty film about having to overcome one's weaknesses. I can't recommend it strongly enough.

I am currently reading, and enjoying very much, "All the Devils are Here". There were a lot of books that came out right after the financial crisis about how it's causes, mostly focused on what had happened in the mid-2000s to cause the trouble. With a bit more time to do research and put the whole story together, Bethany McLean and Joe Nocera have put together a more complete story, going back to the creation of the mortgage backed security. If you are looking for one person to blame for the mess, you will be disappointed, as it took a long trail of actions by the financial industry, regulators, Congress, and several Presidential administrations to bring about the perfect storm we witnessed.

Finally, the other night I watched a documentary called "Waiting for Armageddon" via Netflix (I am, by the way, very much enjoying being able to download Netflix movies to my TV via my new Sony DVD player). I think many of us who are not Evangelical Christians will be shocked to find out exactly what these people believe, and how it may influence are Middle East policy. Quite scary to think these people are walking around loose. The documentary is done without commentary, so it is the participants telling their own stories about what they believe. Quite an eye-opener!

Wednesday, January 12, 2011

NOAA announced that 2010 tied for the warmest year on record with 2005. In fact, 9 or the 10 warmest years on record have occurred since 2001. Read the story HERE, because I'm pretty sure that this story gets buried at Fox, where there is no science or fact, only opinion. But remember, climate change is a liberal myth, evolution is just a theory, but God for sure exists, even though the science shows the opposite.

Oh, and I imagine that the folks on Fox also won't tell you that "God Bless America" composer Irving Berlin was, in fact, an Atheist. Go figure!

Saturday night I attended the Comedy in Economics presentation at the American Economics Assn meeting in Denver. It lead me to the conclusion that funny for an economist is not the same as funny in general. The "presentation" (this term is used because the dismal scientists had spent the week presenting papers on serious eco matters all week) featured four speakers, and only Yoram Bauman, The Stand-up Economist really understood the demands of performing comedy before a large audience.

First up was David Lefkovits, whose blog Limericks Economiques features exactly what you would think. His limericks are very intelligent and witty, although many would go right over the heads of most people. But not his audience this night. Like the other presenters, he used Powerpoint to try to bring life to his presentation, a big mistake. My experience is that Powerpoint does just the opposite. It sucks the life out of everything. That is why you won't see me using it in my classes. I will be adding this blog to my list on the left, because I am a big fan of the limerick, and Lefkovits does a fine job of writing them.

Next up were the 2 PhD candidates who write the Ecocomics blog (see link on right), with a spirited presentation on how Villainy could be done more efficiently. For instance, it turns out that villains spend an inordinate amount of their resources on activities like trying to kill Batman and taking over the world, and have a very poor success rate. However, they do much better with "niche villainy" such as Riddling, and should stick to that. They also discussed the optimal number of henchmen a villain should hire. Pretty clever stuff.

The third presenter was the toughest to watch, and nearly brought sympathetic flop sweat to my armpits. Jody Beggs is a lovely young lady, very intelligent and witty. And her blog, Economists Do It With Models is very clever and smart, and I will likely be stealing some of her material for my own teaching. And kudos to her for discussing the Economics of the Simpsons, the best show in the history of TV. I only wish she had taken time out from her research and writing to take and acting or public speaking class, as her presentation lagged and deterred from her clever material. If you are reading this Jody, find an improv class there in Cambridge to take. You have the guts, but you need the skills.

Last up was the headline performer of the evening, Yoram Bauman, the Standup Economist (see link at right). Unlike the others, he has considerable experience performing. I have been using his brilliant sendup of Mankiw's "10 Principals of Economics" to entertain my classes for several years, and they love it. I'm not sure if he is focusing his life more on standup or Eco, but he has a very fine way of putting them together. Go to his web site and enjoy his videos, and get on his email list so you can see him if he comes to your town.

Thinking back, I may have been the most experienced comedian in the room that night. And the least qualified to speak in front of the world's leading Dismal Scientists.

Oh, one other note. I dragged Kip along with me, and we were having dinner in a restaurant near in Denver beforehand. I saw an older, balding man across from us eating dinner alone (on sat night) and reading while he ate. I said to Kip that I was sure he was an Economist because he was dining alone. Sure enough, when he got up from the table, he was wearing his convention name tag.

Tuesday, January 4, 2011

If you live in the Denver area and are into Economics and comedy ( and who isn't?) then you might want to check out the American Economics Association 3rd annual Humor in Economics Conference, part of the AEA convention taking place in Denver all week (that's right local folks, as if winter isn't gloomy enough, the town in now crawling with Dismal Scientists!) It is at 8PM Saturday at the Sheraton Hotel downtown. The "show" includes Yoram Bauman, the Stand-up Economist, and others, and includes a presentation on the Economics of the Simpsons. And it is free and open to the public. Think there will be a tall, thin guy in the audience?

Even though I haven't written here in a few weeks, my brain has not been completely shut off. So here are a few things I want to comment on:

1) FORTUNE COOKIES: Kip took me to see "True Grit" for my birthday on Sunday, and to dinner at Chey Thuy, a Vietnamese restaurant that I am quite fond of (get the stuffed grape leaves!). After dinner, we were brought the fortune cookies which are now apparently required at any type of Asian restaurant. Kip's said she would be a leader in her community. Mine was empty. The only conclusion I can draw from this is that my empty cookie means I will be dead soon, and Kip will become a leader by starting a foundation to prevent whatever it is that kills me.

2) TRUE GRIT: If you are a fan of the Coen Brothers, you have probably already seen this entertaining film, or are planning to. If you are not a fan of the Coens, I would have to wonder about your taste in films. Anyway, I recommend you go see this for 2 reasons. First, it is a very entertaining film, and the use of formal dialog will remind you of "Raising Arizona". Second, in our economy we vote with our dollars, and it is important to vote for this type of intelligent, witty adult film so that we get more of them.

3) HULU PLUS: I received as an Xmas gift from Kip a dvd player that also has streams video via wifi from services like Netflix and Hulu plus. If you have been reading this blog for a while you know that I was a big fan of Hulu from the start. Which is why I am so deeply disappointed in what a complete crap service Hulu Plus is. Fortunately, I get a 3 month free subscription with the device, and you can be sure that I will not pay for more. What sucks about it? Well, first, even though it is a pay service, the shows are full of ads. Second, despite being called "plus", it has access to LESS content than the regular Hulu service. Some shows available on their regular service are not there at all, and others do not have the latest episodes. Apparently, this service is a "plus" for Hulu, in that it gets more money, but not for the viewer, who gets crap.

4)SNOW: Several people have asked me if I had any problems in Buffalo because of the big storm on the east coast on Xmas weekend. In fact, on Boxing Day I was at my friends Budd and Jody's house watching the Bills game, and switching over to the Weather Channel between Bills turnovers to laugh at video of people in N. Carolina trying to drive in snow, and yelling "pussies" at the TV when they canceled the football game in Philly (Who DOESN'T want to play football in the snow!). As TWC cut between various reporters in different cities standing in what appeared to us to be a bit of snow, we commented that no one was ever in Buffalo when it is not snowing going "Hey, it's NOT snowing here", nor are they there in July when the weather is quite beautiful. Not to say the weather was nice in Buffalo at that time.

5) WORLD JUNIOR HOCKEY: The World Junior Hockey Tourney is taking place in Buffalo right now, a great event for Buffalo to host. Unless you are a hockey nut, or Canadian (redundant?), you probably don't care. But the Canadians were poring over the border to watch their under-20 boys take on the world. Budd and I went to a Tuesday afternoon game between Finland and Switzerland. Fun thing to do on a Tuesday. Unfortunately, it was a mismatch, and I concluded that we were watching a team full of future NHL-ers (Finland) play a team of future bankers, chocolatiers, and cheesemakers.

Monday, January 3, 2011

Why do I put a link to everything Dave Barry writes on this blog? Because he's the writer I would like to be, sort of, if I had the talent. I have been resting my typing fingers the past few weeks, but fortunately, Dave has not. So it would be foolish for you to do anything right now other than GO HERE TO READ DAVE BARRY'S YEAR IN REVIEW.